POLYCAB - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 4.4

📊 Core Financials: Polycab demonstrates strong fundamentals with ROE at 21.4% and ROCE at 29.7%, reflecting excellent capital efficiency. Debt-to-equity is very low at 0.01, ensuring financial stability. Quarterly PAT surged to 675 Cr. (+56.7% variation), highlighting robust earnings momentum. EPS of 161 ₹ supports valuation strength.

💹 Valuation Indicators: Current P/E of 46.2 is significantly higher than industry P/E of 20.0, suggesting premium valuation. P/B ratio ~10.7 (Price 7,438 / Book Value 697) is steep. PEG ratio at 1.42 indicates moderately expensive growth-adjusted valuation. Intrinsic value appears lower than current price, making entry less attractive unless correction occurs.

🏢 Business Model & Competitive Advantage: Polycab is India’s leading manufacturer of wires, cables, and fast-growing FMEG (Fast-Moving Electrical Goods). Competitive advantage lies in strong brand equity, wide distribution network, and diversified product portfolio. Growth visibility is supported by infrastructure expansion, electrification, and rising consumer demand for electrical goods.

📈 Entry Zone Recommendation: Current price (7,438 ₹) is near DMA 50 (7,380 ₹) and above DMA 200 (6,916 ₹), showing technical support. RSI at 39.4 and MACD negative (-97.1) indicate mild oversold conditions. Entry zone: 7,000–7,300 ₹ for accumulation. Long-term holding is favorable given strong fundamentals, but valuation risks remain elevated.

Positive

• ✅ Strong ROE (21.4%) and ROCE (29.7%)
• ✅ Debt-to-equity very low (0.01)
• ✅ Quarterly PAT growth (+56.7%)
• ✅ FII holdings increased (+2.51%)

Limitation

• ⚠️ High P/E ratio (46.2 vs industry 20.0)
• ⚠️ Premium P/B ratio (~10.7)
• ⚠️ PEG ratio moderately high (1.42)
• ⚠️ Dividend yield modest (0.48%)

Company Negative News

• 📉 Technical weakness with MACD negative (-97.1)
• 📉 Stock correction from 7,903 ₹ high
• 📉 Valuation stretched compared to peers

Company Positive News

• 📢 PAT improved from 568 Cr. to 675 Cr.
• 📢 FII holdings increased (+2.51%)
• 📢 Strong 52-week performance (+86.1%)

Industry

• 🌐 Industry P/E at 20.0, showing balanced sector valuations
• 🌐 Electrical goods sector supported by infrastructure and housing demand
• 🌐 Rising electrification and consumer demand drive long-term growth

Conclusion

🔎 Polycab demonstrates strong fundamentals with high return ratios, low debt, and robust earnings growth. However, valuations remain stretched relative to industry peers. Entry around 7,000–7,300 ₹ offers margin of safety, making it suitable for long-term holding if accumulated during corrections.

Would you like me to extend this into a peer benchmarking overlay comparing Polycab with other electrical and FMEG peers like Havells, Finolex Cables, and V-Guard to highlight sector rotation opportunities?